Federal Court of Australia

RB (Hygiene Home) Australia Pty Ltd v S.C. Johnson & Son Pty Ltd [2020] FCA 1783

ORDERS

THE COURT ORDERS THAT:

1.    The applicant’s application for interim injunctive relief is dismissed.

2.    The applicant pay the respondent’s costs, as agreed or taxed.

3.    The matter be referred to the docket Judge for case management of the applicant’s application for final relief.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

GRIFFITHS J:

1    The applicant and respondent are competitors in the domestic pest control product market. The respondent sells “Raid” branded products, including “Raid Max” branded MultiPurpose Insect Killer which has been offered for sale since around July 2017. Raid Max packaging was modified in around August 2020 to include a double nozzle outlet application and, since late August 2020, “Raid Max” MultiPurpose Insect Killer and “Raid Max” Flying Insect Killer products have been offered for sale with a double nozzle (Raid Max Double Nozzle).

2    The applicant’s case is based on seven pleaded representations set out in [9] of its statement of claim (SOC) said to arise from three separate forms of advertising material (annexed to the SOC) used in connection with the respondent’s Raid Max Double Nozzle pest control products. Those three forms are a television advertisement, website material and a point of sale display. Initially, the applicant also relied upon the packaging of cans with the double nozzle, but it abandoned that aspect of its case at the outset of the interlocutory hearing.

3    The applicant seeks an interim injunction. It relies upon affidavits by Mr Pim Bolyn, Mr Mario Abela and Mr Craig Powell in support of that application. Some of that evidence is confidential.

4    The respondent opposes the interim injunction and has filed affidavits by Mr Kurt Hegvold, Mr James Keep and Mr Hayden Martin. Some of that evidence is confidential.

5    A video of the television advertisement was reviewed by the Court.

6    The seven pleaded representations are as follows:

(i)    the Raid Max Double Nozzle “Makes Missing Bugs Impossible”;

(ii)    the Raid Max Double Nozzle “Delivers A Can’t Miss Spray”;

(iii)    the Raid Max Double Nozzle kills bugs with the “CAN’T MISS SPRAY”;

(iv)    the Raid Max Double Nozzle kills bugs “on the spot”;

(v)    the Raid Max Double Nozzle provides double the spray rate and spray coverage than single nozzle spray products;

(vi)    the Raid Max Double Nozzle provides double the benefit, perceived or otherwise, than obtained using a single nozzle spray product; and

(vii)    the Raid Max Double Nozzle is better and more effective than all other hand held spray canister pest control products in killing household pests.

Principles concerning interim injunctions

7    Unsurprisingly, there was substantial agreement on the relevant principles, which may be summarised as follows. In considering whether or not to grant interim injunctive relief, there are two main inquiries, namely whether:

(i)    the applicant for relief has made out a prima facie case, in the sense explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; 118 CLR 618 at 622-623; and

(ii)    the balance of convenience favours the grant of an injunction or the refusal of relief (which may also require consideration of discretionary factors).

8    The requirement of a “prima facie” case requires the applicant to show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial: Australian Broadcasting Corporation v O’Neill [2006] HCA 46; 227 CLR 57 at [65]. How strong the probability needs to be depends upon the nature of the rights the applicant asserts and the practical consequences likely to flow from the order the applicant seeks: Beecham at 622. In Samsung Electronics Company Ltd v Apple Inc [2011] FCAFC 156; 217 FCR 238, the Full Court said at [67]:

The question of whether there is a serious question or prima facie case should not be considered in isolation from the balance of convenience. The apparent strength of the parties’ substantive cases will often be an important consideration to be weighed in the balance.

See also GlaxoSmithKline Australia Pty Ltd v Reckitt Benckiser Healthcare (UK) Ltd [2013] FCAFC 102; 103 IPR 487 at [81].

(a) Prima facie case

9    The principles applicable to ss 18, 29(1) and 33 of the Australian Consumer Law (as set out in Sch 2 of the Competition and Consumer Act 2010 (Cth)) are also well established. Relevantly, conduct will be misleading or deceptive if it has a tendency to lead into error: Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; 250 CLR 640 at [39] per French CJ, Crennan, Bell and Kiefel JJ. Whether particular conduct is misleading or deceptive is a question of fact to be determined in the context of the evidence of the alleged conduct and the relevant surrounding facts and circumstances: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; 149 CLR 191 at 198-199 per Gibbs CJ.

10    In the ordinary course of commercial dealings, a certain degree of puffery or exaggeration is to be expected. Indeed, puffery has been taken to be part of the ordinary stuff of commerce: General Newspapers Pty Ltd v Telstra Corporation (1993) 45 FCR 164 at 178. This is particularly so in the case of advertising where a degree of latitude is to be allowed given that the nature of advertising reflects the enthusiasm of the advertiser to place its product or service in a favourable light: Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd (1981) 53 FLR 307. In humorous advertisements ordinary and reasonable viewers are likely to make significant allowance for what is readily discernible as exaggeration and parody aimed at making the advertisements entertaining. As Nicholas J observed in Samsung Electronics Australia Pty Limited v LG Electronics Australia Pty Limited [2015] FCA 227 at [81]:

As I will explain, many of the representations relied upon by Samsung will only be conveyed to viewers who interpret information conveyed by the TVCs in a highly literalistic or true to life manner. This ignores the fact that ordinary and reasonable viewers will make significant allowance for what is readily discernible as exaggeration and parody aimed at making the TVCs entertaining and engaging.

11    That is not to say that representations which could be characterised as puffery are immune from provisions prohibiting misleading or deceptive conduct. The applicant relied upon the following statements by Murphy J in REA Group Limited v Fairfax Media Limited [2017] FCA 91 at [89]-[90]:

89.    That is not to say that puffed statements cannot convey a definite meaning upon which an ordinary or reasonable reader could rely. For example, in Byers v Dorotea Pty Ltd (1986) 69 ALR 715; (1987) ATPR 40-760 (Byers) Pincus J held that a representation that apartments advertised for sale in a new apartment tower would be “bigger and better” than the apartments in a nearby apartment tower constituted misleading or deceptive conduct. In Unilever Buchanan J held that a claim that the brand of table spread, Logicol, was “No 1 recommended” was false and misleading insofar as it represented that it was recommended No.1 for lowering cholesterol absorption (at [24]-[32]). His Honour found that the logo containing the “No.1 recommended” claim made “a sufficiently clear representation of superiority” from the competitor’s product (at [32]).

90.    However the question of whether a puffing advertising claim conveys a definite representation or not will depend upon the context and setting in which the claims appear and may involve questions of degree and impression. To a significant extent the authorities turn on their own facts. For example, in Byers the applicants alleged (at 717 and 719) that they were induced to purchase apartments in a new apartment tower by representations that:

(a)    the new tower would be a superior building to the nearby apartment tower;

(b)    the apartments in the new tower would be bigger and more sumptuous;

(c)    there would be a substantial lobby on the ground floor of the new tower; and

(d)    the design, construction and finish of the new tower would be of a high standard and superior in every respect to the nearby apartment tower.

The claims that the new apartments would be “bigger and better” were specific and quantifiable and related to the size of the apartments, the provision of a larger lobby, and the quality of the finishes.

12    It is necessary to consider the effect of the conduct or representations upon ordinary and reasonable members of the relevant class: see Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; 202 CLR 45. Where an issue “is the effect of conduct on a class of persons such as consumers who may range from the gullible to the astute, the court must consider whether the ‘ordinary’ or ‘reasonable’ members of that class would be misled or deceived”: Google Inc v Australian Competition and Consumer Commission [2013] HCA 1; 249 CLR 435 at [7].

13    Applying those general principles to the particular circumstances here, as indicated by the evidence presently before the Court, I shall explain why I do not consider that the applicant has established that there is a serious issue to be tried.

14    I accept the respondent’s contention that the “can’t miss” representations (i.e. [6(i) to (iii)]) are each pleaded with an artificial level of simplicity and literalness that no ordinary and reasonable reader or viewer in a consumer context would understand to be conveyed. It is inappropriate to take part of an advertisement and isolate the meaning of each of the particular words and phrases. The message must be read in context (TGP Internet at [52] and Puxu at 199 per Gibbs CJ). The pleaded representations assume that the respondent’s advertising concerning the use or performance of the Raid Max Double Nozzle Products promised an absolute and certain outcome, i.e. an invariably successful application of the spray to the insect targeted.

15    Such a representation is unlikely to be understood as literally true by an ordinary and reasonable member of the class. An ordinary and reasonable member of the target audience could not be expected to understand in a household retail consumer context that each of the relevant advertisements either separately or in combination guarantee unqualified success in the application and outcome of the product in all circumstances. As observed in TPG Internet at [47], a consumer of that kind cannot be expected to pay close attention to the contents of such advertising. The question is whether, on a transient and perfunctory viewing of the advertisement, a not insignificant number of ordinary consumers are likely to be misled or deceived. On the basis of the present material, I am not persuaded that this presents a serious issue to go to trial.

16    The 15 second television commercial at Annexure B to the SOC makes clear that the “can’t miss” representations are not to be taken literally. In a humorous advertisement, “Steve” is mocked as someone who misses everything, including attempting to swat a fly with a pillow and missing the waste bin when he attempts to throw a piece of paper into it. The humour lies in the exaggeration. The ordinary and reasonable member of the class would understand the representations in that context (that is not to deny that, in some circumstances, puffery may involve representations which are false or misleading, as Murphy J observed in REA). But each case necessarily turns on its own particular facts and circumstances. I regard the applicant’s construction of the representations to be excessively literal and strained. There is no serious question for trial, at least at this stage of the proceeding and on the basis of the evidence presently before the Court.

17    The kills “On the Spot” representation (i.e. [6(iv)]) is similarly an exaggeration that is unlikely to be taken literally by an ordinary and reasonable member of the class.

18    Likewise, I consider that the remaining, apparently implied, representations fail to raise serious questions for trial. In contrast to the artificial, simplistic and literal meaning pleaded in the first three representations, the remaining representations (i.e. [6(v) to (vii)]) do not separately or in combination convey any of the contended meanings. In particular, merely because the advertising gives emphasis to the feature of the “double nozzle”, does not imply that the efficacy of the product is double that of a single nozzle product.

19    Similarly, representation [6(vii)] (the implied comparison representation) reads into the material an implicit comparison with other products not mentioned or referenced in the advertisements themselves. Nowhere in the advertisements is it asserted that a double nozzle equates to double the efficacy of some unidentified single nozzle product, whether sold by the applicant or someone else. In any event, the 15 second television commercial is short and the point of sale material competes for attention with other marketing materials and products in supermarkets. Neither is likely to attract more than transient or perfunctory attention. Ordinary and reasonable members of the class would understand the advertisements to be wholly concerned with the Raid products and would not read into them an implicit comparison with any other product: see Telstra Corporation Limited v Singtel Optus Pty Ltd [2020] FCA 1372 at [14] per Jagot J.

20    Mr Abela’s evidence, which was adduced by the applicant in support of its contention that the pleaded representations regarding the efficacy of the Double Nozzle were false, does not assist the applicant. First, that evidence warrants little if any weight in circumstances where the product tested by Mr Abela was not the Raid Max product the subject of the applicant’s challenge. Instead, the tests were done on another of the respondent’s product, namely insect spray cans called “One Shot”. As Mr Abela candidly acknowledged, although the products use the same label, it was unknown to him whether the Raid Max product retained the same “formulation framework” as the One Shot products.

21    Secondly, Mr Abela’s evidence generally seeks to contradict a claim that is not made. As I have already explained, I do not accept that there is an implied representation that the Raid Max Double Nozzle product has double of any of the properties contended in the representations.

22    Thirdly, the comparison between two Raid products is meaningless: there is no utility in drawing a comparison against a generic single nozzle product, particularly a Raid product.

23    For these reasons, I consider that none of the pleaded representations raise a serious question for trial. Indeed, on the basis of the existing materials, I consider the applicant’s case to be weak. That is not to say, however, that it may not be strengthened by further evidence for the purposes of the trial.

(b) Balance of convenience and discretionary matters

24    For the following four reasons, I accept the respondent’s contention that the balance of convenience and discretionary factors are in its favour.

25    First, the respondent’s evidence establishes that the applicant’s complaints in relation to the pleaded representation “kills bugs ‘on the spot’” is a packaging slogan that has been used by the respondent on the Raid Max MIK product (without the double nozzle) from July 2017 and on both the Raid Max MIK Product and the Raid Max FIK Product with double nozzles since late August 2020. Given the intense rivalry between these two competitors, which would involve close mutual scrutiny of the competitor’s commercial operations, it may be inferred that the relevant matter came to the applicant’s attention sometime ago. In relation to the other advertising complained of, the television commercial was first aired on 8 November 2020, the point of sale advertisement was first displayed in early November (and specifically on 4 November 2020 in Coles), and the website ad was first displayed on 17 November 2020.

26    As interlocutory injunctive relief is a discretionary remedy, the applicant’s delay in prosecuting this complaint in relation to the advertising claims which have been in market for about a month for the television commercial and point of sale display weighs heavily against any interim injunctive relief in respect of that representation.

27    Secondly, I accept that the grant of interim injunctive relief would cause prejudice to the respondent. Some adjustment has had to be made in assessing the parties’ respective evidence on the issue of prejudice to take into account the applicant’s last minute abandonment of its claims concerning packaging of the spray cans. The respondent’s evidence, which I accept, describes the logistical difficulties for it if interim injunctive relief is granted.

28    I find that interim injunctive relief would cause detriment and loss in respect of the respondent’s advertising and promotional calendar, including:

(a)    Costs thrown away on developing the television advertisement and the loss of television advertising throughout the summer marketing period.

(b)    Estimates of $160,000 lost on the costs of the television advertisement and costs of $462,000 of bookings required to be cancelled and which the networks would seek to recoup on future bookings.

(c)    The estimated time and costs of developing a new television advertisement ($100,000) would effectively deprive the respondent of the ability to advertise above the line at all for the balance of the pest season. It is unclear on the evidence whether there is sufficient time available for the respondent to develop a new advertisement.

(d)    Losses would arise from the respondent needing to arrange for the removal at retail stores of various point-of-sale promotional material (including display bins, “Beanies”, “Aisle fins” and other material including hard copy catalogues) together with lost forward bookings for those activities through December 2020 to February 2021.

(e)    Additional time of 4 weeks and an estimated cost of $5,000 to develop and replace the website material.

29    I accept that the applicant also faces prejudice if interim relief is not granted. In part this is because the peak season for sales of domestic pest control products occurs between November and March, which coincides with the season when flying and crawling insects are most prevalent. Sales of its products may be affected and the damage suffered by it may be difficult to measure. Moreover, I accept that the applicant faces the prospect of having to persuade consumers who switch to the respondent’s products to turn back to it.

30    The parties’ respective evidence concerning prejudice and damage needs to be weighed in order to determine where the balance of convenience lies. What tilts that balance in favour of the respondent is the weakness of the applicant’s case. That is why I find that the balance of convenience favours the respondent.

31    Finally, I see no reason why the applicant should not be left to claim damages if it pursues final relief. The claim is essentially a damages claim and it appears that it is capable of quantification. Significantly, Mr Bolyn has estimated a $1.3 million loss to Mortein in the period November 2020 to March 2021.

Conclusion

32    For these reasons, the applicant’s application for interim injunctive relief should be dismissed, with costs.

33    The matter will now be referred to a docket Judge for case management in respect of the applicant’s claims for final relief.

Associate:

Dated:    11 December 2020